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Biden Administration’s New Crypto Rule Forces Full IRS Oversight, Sparks Industry Backlash
The US Treasury and Internal Revenue Service (IRS) have issued a sweeping new regulation requiring brokers facilitating digital asset transactions to report all user activity to the IRS. This unprecedented move has sparked widespread industry backlash, with critics arguing that it overreaches legal boundaries and may stifle innovation.
Scheduled for publication in the Federal Register on December 30, 2024, this rule mandates platforms, including decentralized finance (DeFi) services, to track sales of all digital assets, including non-fungible tokens (NFTs) and stablecoins. The Treasury claims that these measures are designed to align tax reporting for digital assets with existing requirements for traditional securities brokers, aiming to close the tax gap and enhance transparency.
Under the new rule, platforms will be required to report gross proceeds from all transactions using Form 1099-DA, maintain records for seven years, and verify the identities of users engaging in transactions. Critics argue that these measures will impose significant compliance costs on platforms, potentially stifling innovation and driving businesses overseas to avoid stringent reporting requirements.
The crypto industry is already preparing for legal battles to challenge the regulation’s legality, while crypto businesses are urged to evaluate their compliance frameworks to prepare for potential changes. The move has sparked intense debate among stakeholders, with some arguing that it will level the playing field between digital and traditional financial markets by requiring similar reporting standards.
As the crypto community navigates this unprecedented regulatory shift, it is crucial to monitor updates, consult legal experts, and adapt to regulatory shifts to safeguard investments and operations.
Source: www.crypto-news.net
